New Delhi: Digital penetration of UPI apps like PhonePe and Google Pay saw steep growth in rural India amid the pandemic, a joint report by consultancy firm Bain & Company and the Confederation of Indian Industry showed.
In a report titled, ‘Innovation in India’s Rural Economy’, it was stated that PhonePe’s monthly transaction value rose from to Rs 3 lakh crore Rs 0.6 lakh crore between April 2020 and September 2021 while Google Pay experienced month-on-month growth of 7% during these 18 months.
Accelerated by the pandemic, the report said that currently UPI processes eight times more transaction value than credit.
From almost no presence in 2017, the development enabled faster and easier access to finance in rural India that has lower penetration of ATMs and banking facilities.
The process was boosted by government interventions like the Payment Infrastructure Development Fund, which subsidises the deployment of payment acceptance infrastructure in tier 3 to tier 6 centres.
The study also noted that digitisation of agriculture spurred credit growth in rural India.
Agri-tech start-ups to cause ‘massive disruption’
Technological innovation led by new agri-tech businesses created robust lending profiles of even small-borrowers. High-quality weather data helped lenders predict bumper crops and probable defaults, the report said.
“Agri-credit has increased at 10% CAGR in the last five years, reaching 14 lakh crore in 2019–2020. About 35% of agri-credit business comes from three states: Tamil Nadu, Andhra Pradesh, and Uttar Pradesh,” going by the numbers provided in the study.
The report stated that agri-tech start-ups were also exploring partnerships and funding options to provide new credit solutions to farmers. “These enablers have significantly lowered the time, human effort, and cost of onboarding new borrowers,” it said.
The report claimed that investments in agri-tech start-ups also skyrocketed between 2017 and 2020, attracting private equity investments worth Rs 6.6 crore. It predicted that Indian agriculture is at a cusp of “massive disruption” due to these new agri-tech startups that can address systemic inefficiencies by adopting advanced technology and new farming models.
The industry study also highlighted how many agri-tech start-ups still struggle to build trust with farmers despite increased digital awareness in the rural ecosystem.
(Edited by Monami Gogoi)
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